China is doing this as they are extremely paranoid right now. Without 8%+ growth, they cannot employ the 24 million new workers entering their economy each year. Thousands have already been laid off in the southern manufacturing region, and some small protests have already erupted. #1 priority for the Chinese government is to keep the workers employed and thus happy. They have always been paranoid about a revolution (so is the House of Saud for that matter).

China is Marxist in government, but their economy has become quite capitalist, so they don't wish to merely invent do nothing jobs for everyone anymore. This infrastructure announcement is actually BAD news as it clearly shows how worried the Chinese really are. They have 1.5 trillion in reserves to play with, but this could get drawn down quickly in a country of their size if they are not careful. Outside investment in China has also come to a screeching halt. Roubini believes China could actually implode, as do I, if the global slow down gets ugly enough, and if it lasts for more than a few quarters.